Yen hits three-month high after Trump helps prop up currency
The yen has climbed to a three-month high after Japan and the US carried out a rare joint intervention to support the currency, marking the first such collaboration between the two countries since 2011. The move matters because it signals growing alarm in Washington and Tokyo over the yen's persistent weakness, driven by a gap between Japanese and US borrowing costs, and highlights President Trump's direct involvement in shoring up an ally's currency.
The yen strengthened to ¥155 against the dollar on Monday, up from a 40-year low of nearly ¥164 the previous week, after coordinated yen-buying by both governments. Trump said the US was "always there for Japan", while Treasury secretary Scott Bessent, whose notebook was seen listing a plan to buy $5bn-$10bn of yen, vowed further intervention if needed and repeated calls for the Bank of Japan to raise rates further. Analysts were divided on the outlook: MUFG's Lee Hardman said the threat of more intervention should deter speculators, while Oxford Economics warned the action alone would not reverse the underlying trend of yen weakness, with the BoJ likely to hold off on further rate rises until December.
In short
- Yen hits three-month high after US-Japan joint currency intervention.
- First such joint action since 2011; yen had hit a 40-year low.
- Analysts split on whether it will reverse yen's underlying weakness.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Governments have a responsibility to prevent excessive currency volatility that harms their economies and trade partners. The yen's weakness to 40-year lows represents a genuine economic problem for Japan, driving inflation and eroding purchasing power, and coordinated intervention with the US signals both resolve and unity in addressing it. When currency weakness is driven by temporary interest rate differentials rather than fundamental economic deterioration, well-timed intervention can be effective in deterring speculation and stabilising markets.
The case against
Whilst well-intentioned, such interventions address symptoms rather than root causes, as the underlying problem of persistent interest rate differentials between the US and Japan remains unresolved. The Bank of Japan's reluctance to raise rates further until December undermines the intervention's effectiveness, and coordinated currency purchases represent an inefficient use of official resources that ultimately may struggle against fundamental market forces. Rather than repeatedly propping up the yen through intervention, governments should focus on the monetary policy coordination necessary to eliminate the underlying incentive for capital to flow out of Japan.
Explained simply
The yen is Japan’s currency, and its value against the US dollar affects the cost of imports and Japanese goods sold abroad. It had weakened as interest rates in Japan stayed much lower than in the United States, making dollar investments more attractive to some investors.
Japan’s government can buy yen and sell dollars to try to support the currency; this is known as intervention. The Bank of Japan sets interest rates, while the US Treasury manages American government finances, and the two governments have coordinated such action before, most recently in 2011.
A stronger yen can ease pressure on Japanese households and businesses that pay for imported goods, but intervention may have limited effect if the interest-rate gap remains. The episode also shows how currency movements can involve decisions by governments as well as central banks and investors.
Americas Asia Business Government Politics Software Technology World